DOCKET NO.:  FI710493RT, FL710350RO
                              STATE OF NEW YORK
                      DIVISION OF HOUSING AND COMMUNITY RENEWAL
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK  11433




     --------------------------------------------X   
     IN THE MATTER OF THE ADMINISTRATIVE         :  SJR NO. 6442
     APPEALS OF                                     ADMINISTRATIVE REVIEW  
                                                 :  DOCKET NOS. FI710493RT
         SEYMOUR and PEARL WASSERMAN,                           FL710350RO
                              TENANT-PETITIONERS :  D.R.O DOCKET NO. EJ710245R
                       and
                                                 :
            CROSSLAND SAVINGS BANK,              
                               OWNER-PETITIONER  :
     --------------------------------------------X   


                                               ORDER AND OPINION REMANDING PROCEEDING TO RENT
                         ADMINISTRATOR UPON RECONSIDERATION

     The above named petitioners filed timely Petitions for Administrative Review 
     against an order issued on August 16, 1991, by the Rent Administrator, 50 
     Clinton Street, Hempstead, New York, concerning housing accommodations known 
     as Apartment 2P, 90 Knightsbridge Road, Great Neck, New York, wherein the 
     Rent Administrator determined that the prior owner had collected $16,600.40 
     in overcharges including interest, and $2,680.40 in excess security.  The 
     Administrator directed the tenants to a court of competent jurisdiction if 
     they wished to seek rescission of a purported contract to purchase the 
     cooperative shares to the subject apartment.

     The issues in these appeals were whether the overcharges were subject to 
     treble damages and whether the Administrator should have allowed a rent 
     increase for certain alleged improvements to the apartment, thereby reducing 
     the overcharge.  Also at issue was the timeliness of the owner's petition.  
     These proceedings were consolidated as they involved common issues of law and 
     fact.

     In an order issued October 5, 1992 the Commissioner granted the tenants' 
     petition in part and denied the owner's petition.  With respect to the 
     owner's petition, FL710350RO, that Order and Opinion was issued pursuant to 
     a stipulation in an Article 78 proceeding before the Supreme Court, County of 
     Nassau, Justice Christ, dated June 3, 1992, Index Number 8384/92, which 
     directed the Division to issue an Order and Opinion in the underlying 
     Petition for Administrative Review within 125 days of June 4, 1992.

     More specifically, the October 5, 1992 Order: (a) imposed treble damages as 
     sought by the tenants in their appeal;  (b) used the prior rent as the lawful 
     rent for the period covered by the Administrator's order; (c) declined 
     without prejudice to consider the lease renewal contentions raised by the 
     tenants for the first time on appeal; (d) treated the owner's appeal as 
     timely, in part because the Administrator had served the order only on the 
     prior owner; and (e) refused to reduce the overcharge despite certain 
     improvements alleged to have been made to the subject apartment because the 








          DOCKET NO.:  FI710493RT, FL710350RO

     documentation of same was submitted for the first time on appeal without good 
     cause.

     In an Order issued December 2, 1992, the Commissioner granted the owner's 
     request for reconsideration of the October 5, 1992 Order, finding that it


               "should be reopened and remanded to the Rent Administra 
               tor for the limited purpose of determining whether when, 
               by virtue of a judicial sale or its equivalent, the 
               current owner, a banking institution which became the "de 
               facto" owner upon the prior owner's defaulting on its 
               mortgage, should be relieved of liability for treble 
               damages.  Triable issues of fact exist concerning the 
               Bank's willfulness and corresponding liability for treble 
               damages.  The Bank, as "de facto" owner, has the burden 
               of establishing by a preponderance of the evidence that 
               the overcharge was not willful.  Factors to be considered 
               in determining the issue of the Bank's willfulness should 
               include its refund of all overcharges prior to the 
               determination of the PAR by the Agency; was such refund 
               made within a reasonable time after the Bank acquired the 
               premises; whether the Bank relied upon rent records 
               provided by its predecessor; whether that reliance was 
               reasonable, and whether the Bank otherwise had reason to 
               know or should have known that an amount in excess of the 
               lawful rent was being charged.  The aforegoing are some 
               of the factors bearing on a finding of willfulness which 
               must be explored at a hearing before an Administrative 
               Law Judge of this Agency.

               "Accordingly, the matter will be reconsidered on the 
               basis of the original Petition for Administrative Review 
               together with the evidence presented in this request for 
               reconsideration and relevant comments received in reply 
               thereto.

                                        . . .             

               "Pending the issuance of a new order and determination, 
               the tenants are directed to pay the monthly rent provided 
               in the Administrative Review Order and Opinion Nos. 
               FI710493RT and FL710350RO, issued on October 5, 1992.  In 
               all other respects, the aforesaid order is stayed pending 
               the issuance of the new order and determination."


     The Commissioner is of the opinion that the proceeding should be remanded.

     THEREFORE, in accordance with the Emergency Tenant Protection Act and 
     Regulations, it is





          DOCKET NO.:  FI710493RT, FL710350RO



     ORDERED, that this proceeding be remanded to the Rent Administrator for 
     further processing, including a hearing, in accordance with this Order and 
     Opinion, and with the December 2, 1992 reconsideration order.  The October 5, 
     1992 Order and Opinion of the Commissioner is stayed pending the issuance of 
     a new order on remand.  However, the tenants are directed to pay the rent 
     provided in the October 5, 1992 Order.

               ISSUED:



                                                                                        
                                                              JOSEPH A. D'AGOSTA
                                                              Deputy Commissioner     

                



    

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